[1] The meaning of "use for the business" under Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) subparagraph 1 of the Local Tax Act and the standard for determining the scope thereof

[2] The case affirming the judgment of the court below which held that where a school foundation acquired real estate to use it as an official residence of the president of a university under its control and actually resides therein and reports various duties, such real estate constitutes a case where the school foundation uses the above real estate directly for its purpose

[3] The meaning of Article 112 (2) 3 of the Local Tax Act "in a case where construction works are commenced for the purpose of use other than high-class housing"

[1] Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) subparagraph 1 of the Local Tax Act provide that the acquisition and registration taxes shall not be imposed on the acquisition and registration of the real estate to be used for the business by a non-profit entrepreneur as prescribed by the Presidential Decree for the purpose of memorial services, religion, charity, academic research, art, and other public services. Under each of the above provisions, the term "use of the real estate for the business" means that the real purpose of use of the real estate is to be directly used for the nonprofit business itself, and the scope of "use for the business" should be objectively determined based on the actual relation of use

[2] The case affirming the judgment of the court below which held that where a school foundation acquired real estate to use it as an official residence of the president of a university under its control and actually resides therein and reports various duties, it constitutes a case where the school foundation directly uses the above real estate for its purpose

[3] Articles 107 and 127 (1) of the Local Tax Act provide that "high-class housing" under Article 112 (2) 3 of the same Act, which is subject to heavy taxation of acquisition tax, shall not be subject to non-taxation of acquisition tax, and Article 112 (2) 3 of the Local Tax Act provides that "high-class housing" shall not be deemed high-class housing in cases where it is used for non-residential purposes or starts to work for change of use for non-high-class housing within 30 days from the date of acquisition of residential buildings (high-class housing) or for non-high-class housing, for the purpose of use for non-high-class housing." In this context, "cases where construction for change of use commences for non-high-class housing" shall be deemed as simply a report on change of use of a building or an application for approval of a project plan

[1] Articles 107 subparag. 1 and 127(1)1 of the Local Tax Act, Articles 79 and 94 of the Enforcement Decree of the Local Tax Act / [2] Articles 107 subparag. 1 and 127(1)1 of the Local Tax Act, Articles 79 and 94 of the Enforcement Decree of the Local Tax Act / [3] Articles 107, 112(2)3 and 127(1) of the Local Tax Act

[1] Supreme Court Decision 2000Du3238 decided Apr. 26, 2002 (Gong2002Sang, 1278) Supreme Court Decision 2001Du878 decided Oct. 11, 2002 (Gong2002Ha, 2744)

[Defendant-Appellee] Advanced Institute of Education (Attorney Choi Young-young, Counsel for defendant-appellee)

Jeollabuk-do (Attorney Hwang-jin et al., Counsel for the plaintiff-appellant)

Gwangju High Court Decision 2004Na4569 Decided October 6, 2004

Appeal and supplementary appeal are dismissed. The costs of appeal and supplementary appeal are assessed against each party.

1. Judgment on the defendant's appeal

Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) 1 of the Local Tax Act provide that no acquisition tax and registration tax shall be imposed on the acquisition and registration of the real estate to be used for the business by a non-profit entrepreneur prescribed by the Presidential Decree for the purpose of memorial services, religion, charity, academic research, art, and other public services. Under each of the above provisions, the term "use of the real estate for the business" means that the real purpose of use of the real estate is to be directly used for the nonprofit business itself, and the scope of "use of the real estate for the business" shall be objectively determined based on the actual use relation in consideration of the purpose of use and acquisition by the non-profit entrepreneur concerned (see Supreme Court Decisions 200Du3238, Apr. 26, 200; 201Du878, Oct. 11, 2002).

According to the reasoning of the judgment below, the court below determined that the Plaintiff, a school juristic person operating a Howon University, acquired the third real estate of this case in order to use it as an official residence for the president, and recognized that the president actually resided in the relevant area and reported various duties. In light of the fact that the president is in a critical tracking position necessary to carry out the purpose business of the Plaintiff-affiliated University, it should be deemed that the Plaintiff constitutes a case where the Plaintiff directly uses it for the purpose business.

In light of the above legal principles and records, we affirm the above recognition and judgment of the court below as just, and there is no error in the misapprehension of legal principles as to the scope of "use in its business" under Article 107 (1) 1 and Article 127 (1) 1 of the Local Tax Act, as otherwise alleged in the ground of appeal.

2. Judgment on the plaintiff's supplementary appeal

Articles 107 and 127 (1) of the Local Tax Act provide that "high-class housing" under Article 112 (2) 3 of the same Act, which is subject to taxation of acquisition tax, shall not be subject to non-taxation of acquisition tax (registration tax), and Article 112 (2) 3 of the Local Tax Act provides that "high-class housing" shall not be deemed high-class housing in cases where the use of a residential building (high-class housing) is used for non-residential purposes or starts to work for change of use for non-high-class housing within 30 days from the date of acquisition of a residential building, for non-residential purposes or for non-high-class housing purposes." In this context, "cases where a construction starts to work for change of use for non-high-class housing purposes" shall be deemed as "cases where a construction starts to work for change of use"

In the same purport, the court below is just in holding that even if the plaintiff filed an application for change of the purpose of use of the building within 30 days from the date of acquisition of the instant 1 and 2 real estate corresponding to the "high-class house" and applied for approval of the establishment plan of a kindergarten, the conclusion of the contract for change of purpose of use for the purpose of construction is 90 days after the lapse of 90 days from the date of acquisition, and the actual commencement of construction is 50 days after the expiration of 50 days from the date of acquisition, it shall not be deemed that it constitutes a case where the change of purpose of use was commenced within 30 days from the date of acquisition

Therefore, even though the part of the lower court’s determination that the Plaintiff cannot be recognized as satisfying the requirements of “non-profit entrepreneur” due to the Plaintiff’s failure to obtain authorization for establishment of a kindergarten at the time of acquiring the first and second real estate of this case is somewhat inappropriate, the lower court’s determination is justifiable in its conclusion, as long as the first and second real estate of this case constitute “high-class house” cannot be applied with the non-taxation provisions under Articles 107 subparag. 1 and 127(1)1 of the Local Tax Act, so long as it constitutes “high-class house,” the Plaintiff’

3. Conclusion

Therefore, each appeal and appeal are dismissed, and the costs of appeal and appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Hong-hoon (Presiding Justice)